v3.26.1
Debt
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Debt

4. Debt

Term Loan

On May 9, 2025, the Company entered into a loan and security agreement (as amended, the “Loan Agreement”) with K2 HealthVentures LLC (“K2HV”) providing up to $125.0 million in term loans (collectively, the “Term Loan”) across four tranches, subject to certain conditions. The Loan Agreement has been amended three times: pursuant to a First Amendment dated November 4, 2025, a Second Amendment dated December 10, 2025, and a Third Amendment dated June 10, 2026. As of June 30, 2026, total gross

proceeds of $60.0 million had been drawn under the Loan Agreement. For a full description of the facility's terms, amendments, and accounting treatment, see Note 5 in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Pursuant to the Third Amendment, the Company’s interest only period of the obligations under the Loan Agreement was extended from May 2028 to April 2029. The Company is obligated to make interest-only payments through April 2029, with all outstanding principal, accrued and unpaid interest, and the final payment fee due at maturity on May 1, 2029. The Term Loan bears a variable interest rate equal to the greater of (i) 10.45% or (ii) the prime rate as quoted in The Wall Street Journal plus 2.95%.

The Company's minimum liquidity covenant under the Loan Agreement became effective July 1, 2026. Pursuant to the Third Amendment, the applicable minimum liquidity requirement will depend on the Company’s achievement of specified operational milestones and/or its market capitalization and will be equal to (i) 50% of the outstanding obligations under the Loan Agreement, (ii) 110% of the outstanding obligations under the Loan Agreement, or (iii) waived in full (i.e., zero).

The Company may prepay, at its option, all, but not less than all, of the Term Loan then outstanding plus the accrued and unpaid interest on the portion of principal so repaid, subject to a prepayment premium and end of term fee. Prior to full repayment of the Term Loan, K2HV may elect to convert up to $10.0 million of outstanding principal into shares of the Company’s common stock at a conversion price equal to the lesser of $0.8774 per share and the lowest effective price per share of the Company’s next equity financing. Pursuant to the amended Loan Agreement, K2HV was granted the option to convert an additional $2.5 million of outstanding principal into shares of the Company’s common stock at a conversion price equal to the lesser of $2.3906 per share and the lowest effective price per share in the Company’s next equity financing. No prepayment penalty applies to any principal amount converted into common stock.

In 2025, K2HV converted a total of $3.95 million of outstanding principal under the Term Loan into common stock of the Company at a conversion price of $0.8774, resulting in the issuance of 4,501,936 shares of common stock to K2HV. In February 2026, K2HV delivered a conversion notice pursuant to which $2.05 million of outstanding principal under the Term Loan was converted into common stock of the Company at a conversion price of $0.8774, resulting in the issuance of 2,336,448 shares of common stock to K2HV.

The Company's obligations under the Loan Agreement are secured by a security interest in substantially all of its assets, other than certain intellectual property assets, and the Loan Agreement includes customary affirmative and negative covenants and standard events of default, including a material adverse event default. K2HV also retains the right to invest up to $5.0 million in future offerings of the Company's capital stock, subject to certain conditions.

The Company evaluated the Third Amendment in accordance with ASC 470-50 and concluded that the transaction constituted a debt modification, as the change in the present value of remaining cash flows was less than 10%. In connection with the Third Amendment, the Company incurred $0.4 million of costs paid to K2HV which are presented as debt issuance costs and a direct deduction from the carrying amount of the term loan. Debt issuance costs are being amortized to interest expense using the effective interest method over the remaining term of the loan.

 

As of June 30, 2026, the carrying value of the Term Loan approximates fair value.

 

Outstanding debt consisted of the following:

 

 

June 30, 2026

 

 

 

(in thousands)

 

Gross proceeds

 

$

60,000

 

Conversion of term loan principal to common stock

 

 

(6,000

)

Unamortized debt issuance costs

 

 

(1,972

)

Accreted final payment fee

 

 

884

 

Total debt, long-term

 

$

52,912

 

 

The following table provides the components of interest expense (in thousands):

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

 

 

(in thousands)

 

Cash interest expense

 

 

1,426

 

 

 

307

 

 

 

2,862

 

 

 

307

 

Accretion of final payment fee

 

 

261

 

 

 

43

 

 

 

548

 

 

 

43

 

Amortization of debt issuance costs

 

 

133

 

 

 

19

 

 

 

264

 

 

 

19

 

Amortization of deferred debt issuance costs

 

 

—

 

 

 

67

 

 

 

—

 

 

 

67

 

Total interest expense related to debt

 

$

1,820

 

 

$

436

 

 

$

3,674

 

 

$

436

 

 

The effective interest rate for the Term Loan for the three months ended June 30, 2026 was 13.7%.

 

Future principal payments, which include the final payment fee of $4.2 million, in connection with the Loan Agreement as of June 30, 2026 are as follows:

 

 

 

June 30, 2026

 

 

 

(in thousands)

 

Year ended December 31, 2026

 

$

—

 

Year ended December 31, 2027

 

 

—

 

Year ended December 31, 2028

 

 

—

 

Year ended December 31, 2029

 

 

58,170

 

Total principal payments including final fee

 

$

58,170